CII Supports SEC Proposal on Universal Proxies and Clear Disclosure of Vote Standards
The Council of Institutional Investors on Dec. 28 submitted to the SEC a comment letter
on the SEC proposal
for required use of universal proxies in contested elections, and for clear disclosure of voting standards in uncontested elections. CII commended the SEC for proposed amendments that address major longstanding investor concerns, and that are "well-researched, thoughtful and appropriate." The universal proxy proposal is an initiative to ensure that ballots for director elections include all nominees.
CII Publishes Guide to Majority Voting for Directors
As U.S. public companies embrace majority voting in uncontested director elections, CII has published an FAQ (Frequently Asked Questions) guide
that explains the different approaches that companies are taking and which iteration shareholders believe to be the most effective.
Companies claim to use majority voting if they require board nominees to receive a majority of “for” votes in uncontested elections for corporate board seats. But in practice, voting standards vary from plurality to “plurality plus” to majority voting that lets boards overrule shareholders’ preference to majority voting with real teeth.
The FAQ outlines the different approaches and why CII advocates strict majority voting, with directors departing when they receive more “against” votes than “for” votes. CII is engaged in a broad campaign to encourage all companies in the Russell 3000 index to adopt meaningful majority voting. CII also supports an SEC proposal to require companies to use clear terminology in proxy statements about their vote standard. An appendix in the FAQ offers sample bylaw language for consequential majority voting that complies with Delaware corporation law.